The effects of tech and non-tech innovation on brand equity in China: The role of institutional environments

Recently, innovation has been a key driver of brand equity. However, the emerging economies provide a dynamic institutional environment that makes it difficult to explore the relationship between innovation and brand equity. By combining the brand equity literature and institutional theory, our research investigates the effects of technical and non-technical innovation on brand equity and how the effects vary within different institutional factors (product market development, regional legal environment). A sample composed of 124 listed companies in China from 2009 to 2014 was analyzed empirically and provides strong support for the theoretical predictions. The results confirm the positive effect of the two innovations on brand equity and the contingent effect of institutional factors as follows: the regional legal system positively moderates the relationship between the two innovations and brand equity, and product market development positively moderates the relation of technical innovation and brand equity; there was found to be no significant influence of non-technical innovation on brand equity. This study provides crucial theoretical and managerial implications for managers.